The present invention relates to tools and techniques for promoting consumer savings, and relates more particularly to technical improvements and business methods which allow consumers to automatically and incrementally set aside savings when using a credit card or other computer-assisted payment mechanism.
Consumers who wish to place part of their hard-earned money in savings accounts face psychological hurdles, in addition to the inherent economic hurdles. It is difficult to set aside funds for savings when so many other uses compete for those funds, and even more difficult to do so consistently.
One technique used to promote consumer savings is the automatic payroll deduction. Consumers employed by a business that provides such a plan can have a specified amount or specified percentage automatically deducted from their regular paycheck, to be placed in a savings account such as an MRA, KEOGH, 401(k), stock purchase plan, or the like. This has the advantage of making it psychologically easier, at least for some people, to consistently set aside funds in some type of savings account. However, not every employer offers such a savings plan, and self-employed persons must also use some other approach.
Savings may also be promoted to some extent by having xe2x80x9cextraxe2x80x9d money withheld by an employer to increase the likelihood of receiving a tax refund. However, even if a refund is made, it will not necessarily be placed in savings. Moreover, providing the government with a zero-interest loan is often not the best use of one""s funds before the refund is granted.
One credit card, the Discover(copyright) card, offers a Cashback Bonus(copyright) service whereby the consumer receives a check at the end of a given year for an amount which varies depending on the purchases made during the year using the card. Like tax refunds and other xe2x80x9cwindfalls,xe2x80x9d the Discover(copyright) card funds will not necessarily be placed in savings, and the consumer apparently does not receive interest for use of the funds in question by the card issuer or other institution prior to the time the check is cashed by the consumer.
Another credit card, the Principal Bank VISA card, offers a cash back rewards program whereby the consumer""s cash back xe2x80x9crewardxe2x80x9d may be applied toward one of the following Principal products: contributions to a Principal mutual fund; principal payment on a Principal consumer loan; principal payment on a Principal mortgage loan; deposit in a Principal bank deposit account such as a certificate of deposit, savings account, or money market account; contribution to a Principal variable annuity contract; or contribution to a Principal variable life contract. The reward can be selected by the consumer in an application for the Principal Bank VISA card. A Principal representative indicated to the inventor in a telephone conversation on or after Nov. 13, 1999 that the Principal program pays the reward each time the amount of unpaid reward reaches a threshold, such as $100.
By using an unpaid reward threshold rather paying rewards annually, the Principal program helps consumers by decreasing the extent to which consumer funds are not put to work in a savings account on behalf of the consumer. The Principal program also makes it easier for users of the Principal Bank VISA card to incrementally and automatically make deposits to a Principal savings account, Principal certificate of deposit, Principal mutual fund, or other Principal vehicle.
However, in the currently known Principal program the available savings vehicles are limited to those provided by the credit card issuer, namely, Principal Bank. For instance, a consumer who owns a savings account at a bank outside the Principal Financial Group apparently cannot automatically and incrementally send funds to that account when using the Principal VISA card.
The known Principal program also limits the reward to at most a single savings vehicle. For instance, suppose a consumer has two children, has a savings account for each child, and wants to automatically and incrementally make two deposits (one to each savings account) each time the consumer makes a credit card payment. The Principal program apparently does not allow this.
Moreover, the known Principal program is limited to credit cards. Indeed, on its face it is limited to VISA credit cards issued by Principal Bank. Other credit cards, smart cards, charge cards, debit cards, electronic currencies, and other consumer alternatives to cash are apparently not supported.
Finally, the consumer cannot specify the size of the reward relative to card transaction(s). Instead, the reward is apparently fixed at a percentage which is selected by Principal Bank.
Accordingly, there is room for new tools and techniques to help a consumer easily and consistently set aside funds to be deposited in savings accounts, in mutual funds, as loan payments, and otherwise in savings vehicles when the consumer makes a purchase or a payment using a computer-assisted alternative to cash.
The present invention relates to methods, articles, signals, and systems for facilitating savings. For instance, some embodiments allow consumers to set aside for their savings account(s) a specified amount or a specified percentage of a given transaction, when the transaction would otherwise not involve the savings account(s). The invention permits savings to occur as a beneficial side-effect of the consumer""s normal financial activity. The main purpose of a given transaction will normally be to purchase or pay for goods and/or services which are unrelated to the present invention. As a side-effect, however, a portion of the funds charged or received during the transaction will be directed to the consumer""s savings account or another savings vehicle. The transaction may include credit card use, charge card use, debit card use, smart card use, ATM or bank card use, prepaid card use, use of online or electronic money, other electronic funds transfers, and/or similar transactions.
Unlike automatic payroll deduction, the invention can be made readily available to many people, regardless of their employer""s savings programs or self-employment status. Unlike tax refunds and Discover(copyright) card checks, funds specified under the invention will normally be directed to savings. Unlike rewards provided under the current Principal VISA card program, the funds may be directed to one or more savings accounts at various financial institutions, the funds may be deposited regardless of a xe2x80x9crewardsxe2x80x9d threshold, and/or the funds may be sent in response to smart card transactions, electronic check payments, and other transactions which do not require a credit card.
Instead of making a conscious effort specifically directed to putting funds in a savings vehicle, one need do little or nothing to place them there after the inventive infrastructure is in place. The invention can be used to place funds for a given consumer in one or more savings accounts of various types, including standard bank or credit union interest-bearing savings accounts, certificate of deposit accounts, IRAs and other tax-deferred or tax-free accounts, mutual fund accounts, stocks, bonds, loans, and so on.
Other aspects and advantages of the present invention will become more fully apparent through the following description.